CANADA FX DEBT-C$ touches 2009 high, helped by oil; bonds mixed
* Risk appetite on the rise
* Canadian dollar hits highest level in nearly 6 months
* Bond prices mixed
By Ka Yan Ng
TORONTO, May 5 (Reuters) - The Canadian dollar climbed to its highest level versus the U.S. currency in nearly six months on Tuesday as demand for riskier currencies was on the rise.
This week's rebound in commodity prices, oil in particular, helped the Canadian currency hit C$1.1677 to the U.S. dollar, or 85.64 U.S. cents, its highest since Nov. 10. Crude, a key Canadian export, neared $55 a barrel. [ID:nN05259496]
The currency has recently traded in tandem with equity and commodity markets, in line with a theme of investors increasingly willing to take on more risk.
"The main thing is increased risk appetite amid signs global recession is easing," said Sal Guatieri, senior economist at BMO Capital Markets.
At 9:10 a.m. (1310 GMT), the Canadian unit was at C$1.1703 to the U.S. dollar, or 85.45 U.S. cents, up from C$1.1735 to the U.S. dollar, or 85.22 U.S. cents, at Monday's close.
With no major Canadian economic data was due on Tuesday, markets will be watching for employment data, the Ivey Purchasing Managers' Index, and housing reports later this week. U.S. employment figures are due on Friday.
A key risk this week may also be the U.S. Federal Reserve's release of the bank stress test results. [ID:nN04553413]
Canadian bonds were mixed with long bonds edging higher, while shorter-dated debt dipped, as investors weighed equity market appetite and supply.
Bonds have been flat to lower in recent days as equity markets rose to their best levels in nearly six months.
"Given the return of risk appetite and strong rallies in equity markets, it's actually surprising that bonds haven't weakened further," said Guatieri.
"In the background, the Fed's purchases of Treasuries are putting a ceiling on U.S. Treasury yields and that's tending to support the Canadian market as well."
The two-year Canada bond fell 7 Canadian cents to C$100.42 to yield 1.044 percent, while the 10-year bond rose 27 Canadian cents to C$105.90 to yield 3.065 percent.
The 30-year bond rose 10 Canadian cents to C$119.60 to yield 3.852 percent. In the United States, the 30-year Treasury yielded 4.049 percent. (Reporting by Ka Yan Ng; Editing by Jeffrey Hodgson)
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